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Closing Bell

News/Business. Maria Bartiromo, Bill Griffeth. A guide through the most important hour of the Wall Street trading day. New. (CC) (Stereo)

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01:00:00

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Us 12, Boeing 11, U.s. 7, S&p 5, Citibank 4, Tesla 3, Manhattan 3, Steve 3, Eric Schmidt 3, Rick Santelli 3, Legalzoom 2, Google 2, Underarm 2, David Kelly 2, Schmidt 2, Hilton 2, Michael Thompson 2, Ford 2, Brock 2, Bob 2,
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  CNBC    Closing Bell    News/Business. Maria Bartiromo, Bill Griffeth. A guide  
   through the most important hour of the Wall Street trading day....  

    February 11, 2013
    3:00 - 4:00pm EST  

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trying to get back on track after what was the first losing week of the dow. the dow hasn't closed above 14,000 since it was there on february 1st. >> a warning of two potential road be blocks for the market and the economy. huge automatic spending cuts set to kick in and an increase in the price of gasoline. the president's top economic adviser spurling here on both issues. >> by the way probably the biggest story of the day. is your bourbon being watered down? a big scandal involving maker's mark is unfolding. i know you're a wild turkey drinker, but maker's mark, we'll have the latest on the story they are watering down their bourbon. what? >> yeah, what? let's check as we approach the final stretch. the dow jones industrial average down 35 points. off of the worst levels which happened at about 10:00 a.m. this morning. nasdaq composite similar
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pattern. also off of the worst. s&p 500 looks like this. as you can see there, flat on the session. down about two points. >> with less than an hour to go in the trading day, the dow cannot seem to pick up the pieces after snapping that five-week winning streak last week. is that reason enough for investors to take money off the table right now? let's talk about that today. dani back with us here. and we got rick santelli in chicago with us as well. time to take profits? >> you know, people are saying a the the market right now is taking a breather. i think it's holding its breath. we've been in a narrow trading range and we've got a couple things happening this week that are very disconcerning to investors. >> like? >> tomorrow we have the president's state of the union address. we want to hear what's going to happen with sequestration and the debt ceiling. then on wednesday morning, we also have core retail sales. that's going to give an
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indication of what the consumer trend might be. is the consumer in the same field of flowers and unicorns and daisies that the u.s. equity investor is in? i think that's probably what we're going to see. >> already we're not seeing a lot of alternatives for folks' money other than stocks because of the low rate environment. andrew, how are you investing right now? >> well, we're probably going to go ahead and move in this market. looks like the pullback is more likely 1650 back to these levels. so more than likely now is probably the time to ease into the market. you've got tremendous momentum and breath here. you're fighting the tape, as they say. this is probably the time to deploy. >> meanwhile, rick santelli, the race to the bottom of the currency markets was interrupted today. horror of horrors. japanese officials saying they don't want the currency to go much lower. and the euro moving higher as well today. >> once you put that machine in motion, i don't know if you can stop it. and bill, i find it so telling you have so much more outrage
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about a maker's mark liquidity injection than the fed's liquidity injections. >> what's your point? >> that's a story for another day. because that's not good for either. a 20-year chart of the dollar index looks like it's going to be going at these levels for awhile. they look like they're going to stay low for awhile. but a 20-year chart of the dow is a technician's dream. double top or no double top, in for a penny, in for a pound. it totally explains investors' behavior. they're waiting around to see if it is a double top or it punches through. >> it's interesting. looking at the charts, people are trying to figure out if we've come too far too fast. you're looking at taking some money off the table just because of fundamentals. >> in a sense. but i also think there's some great places where you should stay put. there are some great yielding companies out there.
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for example, ge pays 3.4% yield. the stock is down. intel's another good example. 4.3%. their dividends more than doubled since 2007. absolutely stay with them. and you may even when this market does back off -- which it will. we're going to hit a a wall at some point. we've got to deploy more capital. >> the question we've been asking here, andrew, is the catalyst if we're going to get the double top that rick was pointing out on the chart there, we're wondering what the catalyst could be that would send this market lower. dani has talked about what she's looking for this week. what are potential benchmarks you're waiting to happen? >> well, you've been through earning season, the lion's share of it. going into the rest of this year, you're going to look at earnings margins. how much are they going to deteriorate. and it looks like they're kind of hanging in there. so that part of the worry isn't there yet. the second worry is going to be any policy coming out of the
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state of the union tomorrow. anything that would tell the markets something adverse for assets. that's going to be a problem. then finally you're looking at emerging markets, international markets. how's the heart beat there. what's going on? is it 100 proof? the growth in the markets abroad and not being watered down. so that's -- those are the things you're watching for. >> i am seeing a theme here today. rick santelli, if currencies are destined to continue lower especially the euro, wouldn't that be good for the u.s. stock market? >> you know what? if it's a by-product that the dollar ends up better off because of what i perceive to be an escalating relationship between currencies like the pound, the euro, and the yen, then i'm happy. i've always thought like ben -- like mr. ruben, a strong dollar policy is in e u.s.'s best
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interest. i think it's a good thing. for us anyway. >> yeah. andrew, what about you? in terms of currencies away from stocks, any interest? >> yeah. we still have a nice position in gold. we do like commodities for the long haul. we do believe part of the strategy is reflating our ways out of these problems. and we also still like the mlks master limited partnerships. that's a tremendous growth space. we still like those investments at this time. >> all right. we'll leave it there. thanks, everybody. we appreciate it. we'll see you soon. we've got big technology names in the news today. let's check on those stocks. let's go to josh lipton. >> hey, maria. a roundup today in big tech today. google slipping today as the company reported its former chief executive is selling some 42% of its google stake would
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could net him $2.5 million. and apple up after reports that the iphone maker is exteermting with the design of a device similar to a wristwatch. tim cooke will be speaking tomorrow at the goldman sachs tech conference in san francisco. and blackberry dropped. the company formally known as research in motion reportedly losing a big customer. home depot transitioning some 10,000 employees to iphone. and we'll staff with mr. softy today. microsoft surface pro is in short supply. microsoft said there was strong customer desire. and it was sold out almost immediately. stores only received a few of the tablets. back to you. >> thank you is much. controversy today around elon musk's tesla. musk saying "the new york times"
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claim saying the battery is bad in cold weather is bogus. he's on the phone right now. good to have you on. thanks for joining us. >> thanks for having me. >> we've seen the article. what are you saying against this article? that they have the wrong information? >> yeah. i mean, essentially the -- we think the article is something of a setup. it's pretty unreasonable. i don't want to paint the whole "new york times" as being problematic, but i do think that this writer and this particular article really is misleading. >> what could you tell us about the battery then to offset what's being printed today? >> well, when we downloaded our vehicle logs after the test drive, he had not charged up to the maximum charge in the car. essentially it's like starting off a drive with a tank that's not full. and then instead of driving to the next charger location, there was an extended detour through
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manhattan. and -- and it also showed that at times he was driving very fast. in some cases ten miles or more above the speed limit. when you drive really fast, the range decreases. when you factor in those three things, it's to be expected that you're not going to make it from one charge to the next. and we warned him you can't do these things. >> right. with all due respect, mr. musk, who doesn't drive a tesla faster than the speed limit, but that's another issue. i'm intrigued by the word setup you used there in your first answer. do you feel this blogger who had this story being set up? was he setting it up? i mean, was this is deliberate fabrication in your view of how this was portrayed? >> you never know for sure in these things, but i would say that it's more likely than not. we explicitly said to do this
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trip he needs to make sure he's fully charged when he starts up, that he doesn't take detours, and that he drives at a reasonable speed. i'm not talking about some ridiculously low speed. i'm talking about, you know, at least -- not too far above the speed limit. and none of those three things were done. so if somebody's explicitly asked to take reasonable actions in a test drive and then blatantly doesn't, what conclusion is one supposed to reach? >> but it seems like these two things, going faster than the speed limit, taking a different route as what the plan is, it seems that that is opening a sort of a can of worms right there to say if you make any detour to what you expected, the battery's not working. so it seems vulnerable. >> no. >> just by those three things you're pointing out. >> no. i mean, it's just like if you had a gas tank car. if you only filled up part way
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and instead of driving to your destination you meandered through downtown manhattan and the traffic and everything and then raced to where you were originally to go and you ran out of gas, people would just think you're a fool. >> sure. >> i'm intrigued -- i'm intrigued that you're responding as you are. this suggests to me that you feel that -- i mean, obviously we're looking at your stock which was down today perhaps on this "new york times" article. but do you feel this could do damage to the tesla brand? >> well, i do. and the thing is, this article -- obviously "the new york times" has huge distribution and comes with a great deal of authority. and i think for the most part that it's warranted. but there are times when it is not. there are times when "the new york times" has, well, published articles that are less than accurate. and it's well known situations like that. and i think unfortunately this is one of those cases.
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i don't want to paint -- i don't think all articles in "the new york times" are misleading. i think most of them are quite accurate and they take great pains to be accurate. >> right. but if they're making a claim about the tesla that it is not in fact including some of these other issues that you're pointing out, i think it's important that you do point them out. in terms of the charge, how do you know he didn't charge to me mark? >> because whenever we do media test drives we do detailed logging. this is not turned on unless we get written permission. we're sensitive to privacy and we don't do this with any customer cars unless they give us written permission with a signature. >> we understand. >> but for media test drives, after we had a really bad experience a few years ago with top gear where top gear pretended that our car ran out of charge and had to be pushed
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home and then we looked at the vehicle logs and it turned out that it had something like 50 miles of range left. they basically just faked it. after that really negative experience -- >> sure. you're going to check on things. >> exactly. we're going to verify it. >> got it. >> elon musk, good to have you on the program. thanks so much. >> thanks for having me. >> you're probably wondering, cnbc did reach out to "the new york times" journalist. if he will be on today, we'll have his side of the story. >> it seems there are things that were missing before the piece. >> love to hear john's side of the story. we've got 45 minutes before the closing bell. down just 20 points on the industrial average. coming up, it's not your grandfather's exchange traded fund. are creative etfs worth the gamble?
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and jake bogle is also with us. and he's not a fan of the more creative etfs. stay tuned to that warning from the father of the etf fund. what's worse if you prove it is a mistake you have about 0% chance of having it corrected. we'll talk to an attorney and the attorney general taking on the credit agencies. plus bad news for your mint julep. your old fashioned. your manhattan. they may be watered down with less alcohol in them. horror. but still costing the same? is that legal? this developing story is getting a lot of buzz and we are on top of it coming up. >> yeah. the buzz. [ male announcer ] this is not my home.
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okay. [ male announcer ] with citibank's popmoney, dan can easily send money by email right from his citibank account. nice job ben. [ male announcer ] next up, the gutters. citibank popmoney. easier banking. standard at citibank. our all-day special coverage on exchange traded funds continues now from the largest etf conference in hollywood, florida. etfs grew by more than 20% last year and they have over $1 trillion in assets right now. as the industry continues to grow, it's opening access to
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more exotic and riskier markets that were otherwise difficult to access for the individual investor out there. >> and it's these types of etfs to give jack bogle pause. steve sachs runs the types of etfs jack is concerned about. gentlemen, good to have you on the program. thanks for joining us. >> thanks for having me. >> jack, to you first. you like some etfs, but not all etfs. >> i like some etfs, maria, with some with particular purposes. if you want to buy and hold the u.s. stock market or bond market or international markets, buying and holding it here at vanguard, we're indifferent on the etf or the traditional index fund we have. performance will be identical in this. and they're matching indexes. so if -- as long as you don't
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succumb, they're not quite the same because investors move money around a bit too much here. >> steve, i've been doing this long enough that i've seen some fads come and go. i can think of the closed in country funds that were so hot in the early 1990s. and i can't find one these days. i guess they're still out there somewhere. make the case that an etf is not the current fad. that it will eventually fade away. >> well, bill, you know, it's a good question. but you've got to remember that the etf is just the wrapper. within that wrapper is the strategy that you're trying to employ in your portfolio. and we have 10,000 mutual funds in the country. the fact it's just the strategy. and forget about the fact of the wrapper. you need a understand the wrapper. no doubt about it. and you certainly need to educate yourself as an
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informser. but what you need to focus on first is am i deploying the right strategy for my portfolio? >> let's talk about those strategies. i think there are plenty of etfs out there that are plain vanilla. when you say wrapper you're calling them basically a type of etf. if you want to buy dividend payers, emerging markets, whatever. talk about the etfs that are leveraged. what are they and you offer some leveraged etfs, right? >> yeah, we do actually. pro shares is the leading alternative etf company. within the alternative landscape and buckets, we view levered geared as we call it a bucket of the alternative landscape. it's like any other portfolio management tool. the use of leveraged first and foremost from our product perspective is used as a risk management tool. give an example. investors use our geared etfs to
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manage the risks within their portfolio. if you're long equities and you want to reduce your exposure, say the market has moved like in the last couple months. using an inversed level -- >> but why would i want to use something that sounds complicated? other than i just don't buy an etf or sell my etfs? >> absolutely. but again, you got to think about it in terms of the portfolio you're managing, what type of investor you are. maybe you can't reduce your equity exposure. maybe there's tax implications for you doing that or from your long-term investment perspective you're trying to manage risk in the short-term or immediate term. >> bob, you've been covering this for awhile. you've seen a proliferation of all kinds of etfs now. they're not just plain vanilla, are they? >> yeah. i think the question is whether these types of whatever you want to call them more exotic tieps of etfs that jack's concerned
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with. i'm concerned with them too. volatility etfs are appropriate for individual investors. steve, why don't you tell us who uses leveraged and inverse etfs. what kind of investor uses your products and what percentage of your products are used by retail investors and do you think it's appropriate for them to use these? >> absolutely, bob. generally speaking as i mentioned before institutional investors, professional investors, people who are managing money for other people. so people who are professionals in the investment game and the investment strategy, you know, arena. the fact of the matter is we do have individual investors that use our products. we think generally speaking that class of investor is a highly sophisticated and highly educated investor. make no mistake. our products are not for every investor in the market place. you have to educate yourself and do the work and we recommend every individual investor seem out a financial professional like here in this conference today to help them manage their
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portfolios. >> jack, isn't that the issue right now, then? it's a matter of doing the due diligence as steve admits. his leveraged etfs are not for everybody. you're concerned about the existence of these things in the hands of individual investors who have no business being in them. but if they do the due diligence, they would realize that on their own, wouldn't they? >> that's a big if, i think, bill. investors traditionally look at past performance and largely past performance, anyway. and make their choices. what we haven't talked about here which is really central to this whole etf question is the issue of you guessed it. cost. because if you have a high cost, say 1%, which i think is not far from what the profund is happening to charge. you have no way management can beat that. because these are index funds. so you lose your index almost by definition if you do your indexing properly by 1% a year. in over five years or ten years, that's a killer. >> jack, isn't that -- isn't
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that, jack, the very reason etfs has taken from market funds? >> yes. most of the etfs are lower. the vanguard funds are the same, but most of the other etfs are now trying to compete with us. and so etf costs are generally lower. >> all right. >> but the profunds charge 1%. that's extremely high for this business. vanguard averages .1%. so you have to lose. you have to lose by definition. >> and that's the bottom line. >> we got to go, bob. >> can i get last one question? sorry. >> that's why the funds have been so popular. they are transparent and much lower fees as opposed to mutual funds. go online, get more exclusive content from inside the conference. we'll talk about the growing showdown between etfs and mutual funds. we'll tell you how price wars
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are heating up in the industry. check it out on etf.cnbc.com. full disclosure here. my husband is the ceo and founder of the seventh largest etf provider. we have 40 minutes before the close on the dow jones down 20 points. what do carnival cruise lines and boeing have in common? fire and bad press. carnival dealing with an engine room fire right now. boeing still trying to figure out the dreamliner battery fire problem. but is the stock hot right now? look at them coming up. also eric schmidt selling $2.5 billion of google stock. >> holy cow. >> but we want to know what you think he's planning to do with all that money. tweet us @cnbcclosingbell. i'm a conservative investor.
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but that doesn't mean i don't want to make money. i love making money. i try to be smart with my investments. i also try to keep my costs down. what's your plan? ishares. low cost and tax efficient. find out why nine out of ten large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal. more "likes." more tweets. so, beginning today, my son brock and his whole team will be our new senior social media strategists. any questions? since we make radiator valves wouldn't it be better if we just let fedex help us to expand to new markets? hmm gotta admit that's better than a few "likes." i don't have the door code. who's that? he won a contest online to be ceo for the day. how am i supposed to run a business here without an office?! [ male announcer ] fast, reliable deliveries worldwide. fedex.
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welcome back. two big companies, two scary problems. carnival is dealing with a ship with a fire. boeing trying to deal with the issue of the growned dreamliners. let's talk numbers on this story. we have carter worth and steve
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cortez. good to see you. carter, what about the charts. what looks better to you? >> we like boeing here. carnival's had a big move. 30% up the last year. and long-term if you look at the pattern it's in nowhere's ville. but boeing it stays at 75. takes the hits well. we think it breaks out here. a lot of tension, that five-year chart. that's where the opportunity is we think. >> steve, thoughts on boeing? >> i tend to agree with carnival. but i think boeing is in a lot of trouble here. one, what's not in the news right now about the 787 but what i think is coming which is labor strike. they're voting right now. i think they'll opt to choose a showdown. we could have a strike shortly for boeing at a most inopportune time. the second thing i would point out is boeing's price
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performance. up double digit percentage in the new year. so i think if you want to be in transports, any name but boeing makes a lot of sense. >> boeing acts poorly on a relative basis. that is the opportunity which is to say it's had a lot of bad news. not up but not down either. as things hit one day after another. >> and i do think there's more bad news to come. i think the other thing will be out of washington, d.c. defense stocks lately have done very well into last year. but over the last couple weeks lockheed martin did poorly. i also think the defense segment of boeing is a place to be very careful as we get into sequestration round two. >> was there anything that would make you buy boeing here? what would it be to change your mind? >> a far thrower price. always interesting me. if it declines from here, i'd get interested. >> see, that would scare me away. lower price, i'd say you can have it. >> we'll leave it there. thanks so much. see you soon. all right.
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we're heading towards the closing bell. the dow is down 21 points. the s&p has been down every monday so far this year. that's five trading weeks, but still. but we're close to going break even. we'll watch towards the close here. meanwhile, a study finds 40 million americans have mistakes on their credit reports. the agency won't fix them even when shown the proof they are mistakes. we'll talk about that. and mike dewine is with us next. if that story gets you angry, you haven't heard anything yet. one major bourbon maker is literally watering down its booze and charging you the same price. later on the clb. tdd#: 1-800-345-2550 when i'm trading, i'm totally focused. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab...
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did you know there's a 20% chance that you have a mistake on your credit report? and did you know that you have a near 0% chance of getting that error corrected? it's all part of a new
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government report that has been raising eyebrows today. eamon javers has the latest. >> we know how important your credit rating can be. forget buying a house or a car. take a look at this new study looking at the rates of errors on people's credit ratings. 5% had an error on their credit rating report that was significant enough to effect the rating itself. now, those errors could mean higher costs for loans and for insurance for those consumers. and one in five had an error corrected. they only found four out of five saw a modification although we know that process can be maddeningly difficult for a lot of consumers. we talked to all three of the major credit rating agencies. we have a report from experian. we believe it confirms that credit reports are predominantly accurate and serving lenders and consumers well. the vast majority of errors on
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credit reports have no bearing on credit scores for example outdated information on a consumer's phone number and the like. for those consumers caught in that trap where there are errors, they can find it very difficult to get those removed and get a clean report in order to move on with all the financial transactions in their lives. back to you. >> all right. thank you so much. ohio attorney general mike dewine is taking the ftc report a step further. he's opening an investigation into the credit reporting industry saying they are breaking the law. >> he joins us now to lay out the facts as he sees them. welcome back. you say these credit reporting agencies are breaking the law. this is a violation of the fair credit reporting act. is that what you're saying? >> absolutely they're violating the law. my office got involved in this after a series done by the columbus dispatch where they really laid out what the problem is. and the problem is that the
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system that has been designed by these credit reporting agencies who are making so much money, the system is designed not to get at the truth. they have a huge error rate as you heard, but the bigger problem is when you point out the error to them, it is virtually impossible to get them to fix it. and that's really what the problem is. >> yeah. but we contacted all three major credit report agencies and they directed us to their trade association which issued a statement in response to the ftc report. that did not address how to fix the problems. but they did say 88% of errors were the result of inaccurate information reported by lenders and other data sources to national credit bureaus. what do you say to all of that? >> well, don't you think it's interesting they won't talk directly to you? they wouldn't talk directly to "60 minutes" last night. they won't respond.
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the only way they'll respond is by a statement. they've set up a system. imagine if you were someone who had an error and you knew there was an error and you put all your information, you and your spouse put all your information together and ship it off to the credit reporting agency. you know what they do with it? they send it -- they scan it, then they send all that information to india or to chile and someone takes all that information, reduces it just to a little code, and that code then goes sent back to the furnisher of the original information. >> here's the question i have. i saw that -- >> there's no way that's going to work. >> well, i understand that. but here's the question i have. how did we find ourselves in this position? i mean, we realize that those three credit reporting agencies have such power over our lives and our ability to borrow money and our financial future, but -- you know, we know the system apparently is broken based on this ftc report, but it is very broken if we're to believe the "60 minutes" report last night,
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if we are to believe what you're stating after your investigations and this ftc report. how did we find ourselves this far down the highway? >> well, that's a very good question. and i think it's something that congress needs to look at. they are not following the congressional law. the law says clearly when you make a complaint and say you got my information wrong, they have to do an investigation. i've been in law enforcement and doing investigations for a long time. what they do isn't even close to an investigation. it's laughable. so i think, you know, we're going to continue our investigation. i hope congress will take a look at this as well. it's just a travesty. it really is. it effects millions of people. it effects their lives. >> so what -- where are you in your investigation then? what's the next step? and how far do you seek to go? >> well, we're working -- we're talking with other attorney
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generals across the country. i really can't get into that in detail, but i will tell you we're going to stay on this. what we found is in the past attorney generals working together collectively collecting power in different offices can get results for consumers. but i think we need to take a dual track. congress needs to look back at why the law is not being followed as well. >> very quickly, sir then what do consumers need to know now while all the investigations are going on? do they have recourse? or what can they do to help themselves? >> ironically, they do. they can contact their attorney general. and what we have found is that if they contact the attorney general and we are the ones who go to bat for them, these companies have a vip program. and they'll give us answers. but if you're the average citizen and don't go through your attorney general or don't go through your senator or congressman, you're just out to lunch. and you're not going to be able to get any kind of result.
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so i would advise anyone, contact your attorney general's office and you'll be able to get some results that way. >> all right. we'll leave it there. great to have you on the program. thank you so much. we appreciate your time. >> thank you very much. we're in the final stretch of trading for the day. 20 minutes before the market closes. 16 points down on the industrial average. google executive eric schmidt is planning to sell $2.5 billion of his company's stock. do you have any guesses as to what he might do with the cash? we'll get to your responses there. and tesla's elon musk calling in moments ago to refute a "new york times" report on the car. we are waiting on a response from the "times." stay with us. [ male announcer ] this is not my home.
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let's take a look at this. >> what did i just say to you? >> repeat what you just said to me. >> the swim suit models just showed up. they're going to ring the closing bell and i said that will give a lift to the markets here. and what happened? so the s&p 500 is positive now. >> he said that should give the market a rise. >> that's how i said it. >> that's what you said. >> it's up .3 now.
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the s&p has been lower every monday so far this year. we'll see if that pattern is broken today. >> now, are they wearing swim suits? >> they are not. you have not seen them yet? there they are. they're over there. >> let's check it out. >> everybody probably knows now the new swim suit issue from sports illustrated will be out tomorrow. these are young ladies in that issue. and they're ringing the closing bell. >> and they are approaching now to ring that bell. so we will bring you more as we have it. >> hard hitting news. >> well, they're giving autographs. google executive eric schmidt already a billionaire and he's about to get a lot more liquid. jon fortt with the details on that. >> yes, he is. as of the beginning of the year, schmidt had 7.6 million shares of google stock. he's planning to sell up $2.5 billion worth. the trading plan allows him to
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diversify his portfolio over the course of the year. when he said he'd be more concerned if the current ceo or cfo owed. will play less central role going forward. from the sidelines got to say, that's what it looks like. running google is your full-time job, it makes sense to sell -- doesn't make sense to sell 40% of your stake. but if in a year or two he'll be non-executive chairman or take a less active role, he would need some money to pursue other ventures. well, i don't know what schmidt's plans are, but it is clear the company is taking different kinds of risks than when he was ceo. investing in nexus hardware, projects like google glass. >> all right, jon. thank you so much. we asked and you tweeted about this. we asked what you thought eric schmidt should do with that
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cash. here's some responses. c. adams says pay a lot of tacks. should have done it last year. >> he's a little late on that. that's a good point. >> victor tweets he will buy a stake in blackberry. that's a good one. >> wouldn't cost much. >> and another says he should take the money and buy undervalued shares of apple. thanks again for tweeting in. send your comments o on @cnbcclosingbell. >> all right. about 15 minutes to go. and the dow is still down 12 points. the s&p down a fraction right now. >> despite the pullback in stocks today, our next guest says equities are the least of all evils right now. that's michael thompson with us. also, maker's mark is leaving a sour taste in some people's mouths. get this. the company is watering down its bourbon and keeping prices the same. and this news is not going down very well at all. that story coming up later on "the closing bell." ♪
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welcome back. u.s. stocks taking a pause today after hitting a high last week.
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but michael thompson says equities is the least of all evils out there. >> he joins us along with david kelly. mike, you're not alone in this questioning but i wonder if it's a reason to buy simply because you say it's the only game in town. >> well, i think -- >> does that make a valid investment then? >> it's not the only reason in town, but it is an important reason. you can't -- you have -- there's a demographic shift going on where people -- there's a pile of wealth that has to be invested. if it doesn't, there's a problem. that's first. but you have a tepid yet seemingly recovery that barring any shock, you're going to end up with the 7% earnings growth. from 14 to 15. that gives you 10%. to be honest with you, again, it's the lesser of evils. >> david kelly, what do you think? you want to put new money to work here? >> yes, i do. i think it's important to get money that should have been at work all along into the markets. there's about $10 trillion today
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sitting in cash. what we know is cash is paying you zero with an underlying about 2%. so you're earning a negative return right now. i think people think they avoid risk by not being in markets. but the truth is they run risk if the money is running out. so i think equities are about fair value. but bonds are expensive. cash is expensive. >> david, you're the global strategist. we're in the midst of -- the beginning stages of a currency war. as everybody races to the bottom. japan, europe, everybody including the united states here. is that good or bad for equities? >> i think it's generally bad. this is so overmedicated this global economy. europeans are trying to do a lot of different things on monetary fiscal policy. the jpss trying to push currency down. if everyone tries to push their currency down, nobody succeeds. i think it is generally negat e
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negative. i think the narcotics would do better if they did less to try and help them. >> let me ask you about that, mike. is there a real downside risk to all of this? i mean, i understand that it's the lesser of all evils because there just aren't any alternatives to stocks. but what is the downside risk of the federal reserve sort of manipulating this situation and creating an environment where there aren't any alternatives? >> aside from the fact that the fed has basically bullied the market out of the setting of interest rates and basically taken over a lot of the key things? >> yeah. >> i think the one good thing is that -- you know, the theme that would spook the market is if the fed did a turn and said we're going to withdrawal capital. i don't think that's going to happen. if you look at distribution of debt, they can let this roll off and still control it. as a philosophical argument to be made of when are they going to let this thing go off of kind of support? but i think if you avoid the shocks, i think you're okay. the -- look. this is an ideal.
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this is what we have to work with. so there is danger, but i don't think -- i think again the path to the least amount of danger. one thing to add to daift's comments. u.s. companies tend to do really well as long as the u.s. currency continues to be cheaper. >> all right. thank you, guys. good to see you both. thanks for joining us today. appreciate it very much. up next, "the new york times" now responding to elon musk about his claim that the newspaper's test drive of a new high-end electric tesla was bogus. phil lebeau will have the latest on that. then the threat of massive spending cuts hanging over the market, coming up i'll talk to gene sperling from the white house today. they want more revenue. representative tom cole says more taxes are off the table. is there any hope of a compromise to be reached? back in a moment. , , you should know that axiron is here. the only underarm treatment for low t. that's right, the one you apply to the underarm.
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